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Date of Issue: May 04, 2006

Wall Street Journal discovers Island tax problem

National publications are just now discovering what Islanders, particularly business and non-homesteaded property owners, have known for years. There's a problem here with rising taxes and there's a problem with the methods used by the Manatee County Property Appraiser to determine taxable value, particularly on commercial property such as motels and rental accommodations.

Former Siam Garden Resort owner Kent Davis was recently interviewed by the Wall Street Journal on the Island's tax problems.

Davis has long been an outspoken critic of the seemingly "harsh" methods used by property appraiser Charles Hackney to determine value on motels. Davis sold the resort last year in part because his taxes had increased by more than 500 percent in just a few years.

The WSJ wanted to know how the Island's tax situation "affected my decision to sell the resort," said Davis. "At first, I thought this was old news, but when I rechecked my facts, I was shocked."

When Davis and his wife first bought the property in June 2001, they thought it generated more police calls than income.

After completely renovating the property and "solving an expensive crime and law enforcement problem, my wife and I built a nice business and cleaned up the neighborhood, which no doubt enhanced property values for every building around us. What was our reward?" asked Davis.

His property taxes for 2000 were $10,107, but following his renovations, jumped 24 percent to $12,577. In fact, said Davis, because of the increase, he couldn't make the full payment on time and had to pay a late fee of $1,718 for a total of $14,295.

Taxes for 2002 were about the same, totaling just $12,425, but climbed dramatically for 2003, rising 21 percent to $15,076.

In 2003, Davis' property tax bill rose an astounding 46 percent, coming in at $21,974, he said.

But the biggest shock was yet to come. The 2005 tax bill was $36,286, a whopping 65 percent climb from 2004.

That's when he and his wife made the decision to sell.

Davis wonders about the increased taxes.

"Did the county provide any additional services for these increased taxes. No, in fact, they provide less service because of our renovations."

When Davis and his wife made the decision to sell Siam Garden, the new owners kept the usage the same - motel - but sold the units to individuals. It was not a "condo conversion" said Davis, but simply a change from rental unit ownership to individual owners.

What did the PAO do after the property was sold? Davis asked.

It decided to assess each of the 16 units individually as "condominiums," for its 2006 assessment, ignoring the income assessment method, though the income of the property was about the same as last year.

The result: property taxes on the Siam Gardens Resort this year totaled $115,982, a staggering 1,040 percent increase in just six years.

Davis predicted that the new assessment will take between one-third to one-half of the gross income just for taxes and these high taxes are forcing the owners to "pay dearly" for the privilege of maintaining the "nice business" that Davis and his wife built.

"We have predicted for a while that out-of-control property taxes would destroy the tourist industry. Today, we have an Island filled with ‘for sale' signs and few buyers. I wonder if the real estate industry is the next major victim of inequitable property taxes. Who will want to buy property with tax costs like these?" he wondered.

The Citizens Against Rising Taxation organization was formed in October 2004 with Davis as a member for the express purpose of fighting the perceived inequities in assessing business properties on the Island. CART has enlisted the aid of State Sen. Mike Bennett and State Rep. Bill Galvano to push for a change in state laws regarding tax assessments, but, to date, the Legislature appears uninterested.

One accommodation property owner on Longboat Key, however, is fighting back.

Ed Woodland of the Rolling Waves motel has filed a legal action against Manatee County Property Appraiser Charles Hackney regarding the methods he uses to determine appraised value (The Islander, April 26).

Under Florida law, Hackney can use either the sales, income or cost method to determine taxable value. The suit claims Hackney is ignoring the income method because the "sales" method - comparing the sale of similar properties and using condominiums as the benchmark - always produces the highest value.

Because Hackney is an elected official, the Manatee County Board of Commissioners has little control over the operation of his department. If Manatee County were a charter county, under Florida law, its property appraiser would fall under the auspices of the commission and would be an appointed position. Manatee County voters rejected the idea of a charter county several years ago.